*disclaimer: Not financial advice. This is my personal trade plan only. I am not qualified or licensed to advise anyone on their specific positions or trades, I am sharing my personal opinions only. Never make financial decisions based on any information on this site or any associated platforms. Always consult a professional for investment related advice and do your due diligence*
Good evening everyone! I hope you’ve all enjoyed this 3-day weekend. It’s a short week but I expect it to be full of excitement. Friday’s action makes things interesting, I have lots to discuss tonight. Be aware that Powell speaks Thursday just before market open, otherwise it’s a fairly light news week. Let’s dive into the charts:
- Bearish continuation weekly candles. These reversals came from key spots in both an EWT and non-EWT perspective. Bears have control until proven otherwise.
- A reminder of the higher timeframe context. Nothing has changed so far on the higher timeframes.
Ok… here’s where things get interesting… I’m going to jump out of order a bit here, bear with me. There’s a couple ways this week could unfold… Let’s start with what we know*
- I use the term ‘know’ loosely here, because in trading we never really ‘know’ anything… but in the short term we have some high probability reversal structures. Price bounced in 3 waves and shot back down in an impulsive fashion, and is now retracing this impulse. In the short term, I am looking for short opportunities to AT LEAST Thursday’s lows. The sell off on Friday left several supply zones behind, I will be looking for short opportunities there.
- I am fairly confident the bears will make quick work of Thursday’s low, but what happens after that is simultaneously unknown and extremely signficant.
- Option 1 is the more mild of the two scenarios… If price breaks Thursday’s low and finds a reversal shortly after, we still could be in for the larger corrective bounce I discussed last week. There are rock solid invalidation levels for this scenario (3810.50 and 11,635)… W(5) must end before these levels. A strong bounce from the 3850ish area would essentially put everything back to where it was on Thursday night. The running wave(4)s would be odd, but they are possible; and bullish divergence is still present.
- Option 2… is the ‘Mega Bear’ scenario. If price slices through Thursday’s low and accelerates through the invalidation levels for option 1, we could very well see a direct route to new yearly lows. I struggle to make such a drastic count my ‘top’ scenario, but this deserves serious consideration
- Now, how do I plan to trade this?…Simple – I want to get short on the lower timeframes (see the 15m charts above). Assuming I get this short entry I will use Thursday’s low as an initial target, then hold partials and manage according to what reaction we see from there. For all you
football(American football) fans, I am not looking for a ‘Hail Mary’ short here, just a simple screen pass and we’ll see if the bears can break a few tackles.
- In scenario 1, $ARKK could still get to daily supply.
- If the markets take route 1, several swing setups will be in play (these, and those mentioned in prior newsletters).